Use the information to answer the following questions. The Global Advertising Company has a marginal tax rate of 40%. The company can raise debt at an 8% interest rate. The last dividend paid by Global was $1.10. Global's common stock is selling for $7.93 per share, and its expected growth rate in earnings and dividends is 4%. Global plans to finance all capital expenditures with 20% debt and 80% equity. What is the firm's weighted average cost of capital if the firm has sufficient retained earnings to fund the equity portion of its capital budget?

This is the correct answer, 15.70%.

Please answer the below question.

This question continues from the previous one. Assume that the floatation cost of new stock issuing is 1.5%. What is Global's cost of common stock if it has to issue new common stock?

a. 16.23% Wrong Answer

b. 18.65%

c. 19.65%

d. 17.99%

e. 17.78% Wrong Answer